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Yen Up On Talk Europe Seeks Stronger Japan Currency
Reuters, January 24, 2007
NEW YORK (Reuters) - The yen rose against the dollar and euro on Wednesday on news that European finance ministers will push for a more forceful message that the yen is too weak at next month's G7 meeting.
Euro zone finance ministers will draft the European position on Monday, a source told Reuters.
"That G7 news just came out and it's going to take some time to filter through the market," said Brian Dolan, director of FX research at Forex.com in Bedminster, New Jersey. "Bottom line is European opposition to further yen weakness and this is going to increase the pressure on short-yen carry trades to cash out and step back."
The dollar fell to around 120.95 yen after the news from 121.46 just before, while the euro dropped to 156.86 yen from around 157.39.
The yen has been under pressure after the Bank of Japan left rates unchanged at 0.25 percent last week, and markets have scaled back expectations of a near-term hike. Investors often borrow in lower-yielding currencies such as the yen, pushing those unit lower, and buy assets in countries with higher returns.
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